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Quest Diagnostics Partners AT&T

Recently, Quest Diagnostics (DGX) formed an alliance with subsidiaries and affiliates of AT&T Inc. (T). Under the agreement, Quest Diagnostics will offer its Care360 Solution Suite, including the Care360 electronic health record (:EHR) and e-prescribing and laboratory order/results services through AT&T Healthcare Community Online, a cloud-based care collaboration and health information exchange (:HIE) platform.

This partnership will likely provide a more secure access to health data and promote care coordination with cost efficiencies. Quest Diagnostics is currently focusing on expanding its healthcare information technology service line. As a result, it is working to collaborate with leading healthcare providers and develop new EHR solutions to meet the complex requirements.

Quest Diagnostics, through the Care360 suite of products and ChartMaxx electronic document management system for hospitals, offers interoperable technologies that help sharing and accessing of clinical information without costly IT implementation or significant workflow disruption.

The Care360 products, including Care360 Labs and Meds, enable physicians electronically to order diagnostic testing and review test results from Quest Diagnostics and electronically to prescribe medications. Moreover, its complete electronic health record Care360 EHR helps generate a complete record of a clinical patient interaction as well as automates and streamlines the workflow of physician.

We believe that through this agreement, Quest Diagnostics will be able to reach the AT&T Healthcare Community Online customers and expand its business. This whole process is a part of the company’s 5-pronged strategy under its Organizational restructuring program. The strategy aims to refocus on the electronic health record business and pursue partnerships with top EHR vendors to jointly strengthen value proposition. We assume this endeavor to improve the company’s performance going ahead.

However, the ongoing economic challenges in the economy as well as in the company are concerns. Quest Diagnostics’ guidance, which reflects no improvement in the industry trend, fails to impress us. The stock retains a Zacks Rank #3 (Hold).

While we prefer to remain on the sidelines on Quest Diagnostics, other medical device stocks worth a look are Natus Medical Inc. (BABY) and Haemonetics Corporation (HAE). Both the stocks carry a Zacks Rank #1 (Strong Buy).